V2X, Inc. current report, 05 July 2022

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Business Context and Reporting Period

This Form 8-K, dated July 5, 2022, reports the completion of a business combination between Vectrus, Inc. (formerly Vectrus, Inc.) and Vertex Aerospace Services Holding Corp. ("Vertex"). Upon closing, the registrant changed its name to V2X, Inc. The company's common stock will continue to trade on the New York Stock Exchange under the ticker symbol VEC through July 7, 2022, and is expected to trade under the new ticker symbol VVX beginning July 8, 2022.

Key Financial Metrics and Capital Structure

The filing details significant changes to the company's capital structure and debt obligations resulting from the merger and refinancing activities.

  • Equity Issuance: 18,591,866 shares of Common Stock were issued to former Vertex shareholders at an exchange ratio of 67.8668567.
  • Ownership Structure: Former Vectrus shareholders own approximately 37.75% of the outstanding shares. Former Vertex shareholders own approximately 62.25%. Vertex Aerospace Holdco LLC (an affiliate of American Industrial Partners) holds approximately 58% of the outstanding shares, making V2X a "controlled company."
  • Debt Refinancing: The company terminated its previous Credit Agreement and established new debt facilities:
    • First Lien Term Facility: $1.185 billion aggregate principal ($925 million initial tranche + $260 million incremental tranche). Maturity: December 6, 2028.
    • Second Lien Term Facility: $185 million aggregate principal. Maturity: December 6, 2029.
    • ABL Facility: $200 million senior secured revolving credit facility (expandable to $250 million). Maturity: June 29, 2026.
  • Financial Covenants: The ABL facility requires a fixed charge coverage ratio of at least 1.00 to 1.00 when availability is low. The First Lien agreement limits the total net leverage ratio to 4.5.

Note: This filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period. Pro forma financial information is scheduled to be filed within 71 days.

Material Changes Versus Prior Period

  • Corporate Identity: Name changed from Vectrus, Inc. to V2X, Inc.
  • Control: Transition from a public company structure to a "controlled company" status due to the 58% ownership by Vertex Aerospace Holdco LLC.
  • Debt Obligations: Full repayment of the prior Credit Agreement (dated September 17, 2014) and replacement with the new First Lien, Second Lien, and ABL facilities described above.
  • Board Composition: The board was reconstituted to 11 members. Three prior directors resigned. Five directors were appointed by Vertex Holdco, five by the Company, and one is the CEO.

Guidance, Outlook, and Material Agreements

The filing outlines several material agreements entered into at closing that govern future operations and shareholder rights:

  • Shareholders Agreement: Grants Vertex Holdco Parties director nomination rights (up to 5 directors if ownership remains above 36%), voting agreements, and approval rights over significant corporate actions (e.g., M&A, dividends over $25M, debt incurrence exceeding leverage ratios).
  • Registration Rights Agreement: Provides former Vertex stockholders with rights to require the company to file a resale shelf registration statement (Form S-3) and rights to participate in up to five underwritten public offerings.
  • Management Services Agreement: The company entered into an agreement with AIP, LLC (affiliate of American Industrial Partners) for general management and advisory services. The company will reimburse out-of-pocket expenses but will not pay management or transaction fees.
  • Stock Transfer Restrictions: Former Vertex stockholders are subject to a six-month lock-up period post-closing.

Investor Verification Checklist

  • Verify the trading symbol change from VEC to VVX on July 8, 2022.
  • Review the upcoming pro forma financial information (due within 71 days) to assess the combined entity's revenue and profitability.
  • Monitor the company's compliance with the new debt covenants, specifically the 4.5x net leverage ratio and the 1.00x fixed charge coverage ratio.
  • Confirm the composition of the new Board of Directors and the specific voting rights granted to Vertex Holdco under the Shareholders Agreement.
  • Check for the filing of the resale shelf registration statement (Form S-3) for former Vertex stockholders, required within 45 to 90 days of closing.